Oshlack v Richmond River Council

[1994] NSWLEC 20

LAND AND ENVIRONMENT COURT OF NEW SOUTH WALES

RECORD OF HEARING

______________________________________________________________

Coram:Stein J 

Number:40090 of 1993

Matter:OSHLACK

v

RICHMOND RIVER COUNCIL

and            

IRON GATES DEVELOPMENTS PTY LTD

Keywords:                  Costs - judicial review of development consent for subdivision -unsuccessful applicant - public interest litigation - practice of Court - special circumstances

Land and Environment Court Act 1979 s69(2)
Environmental Planning and Assessment Act 1979 ss4A, 77(3)(d1), 90

Hearing date: 18 February 1994

Judgment:ON COSTS RESERVED

Judgment date:         25 February 1994

Appearances:         Applicant       -       Mr I J Dodd (Sol)  

Respondent 1   -       Ms S Winters  

Respondent 2   -     Mr M L Brabazon

Solicitors:Applicant       -       Bartier Perry & Purcell   

Respondent 1   -        D M Jones & Associates, Kyogle    

Respondent 2   -        E J Cressy & Co

No of pages:17

IN THE LAND AND  No  40090 of 1993

ENVIRONMENT COURT  Coram:   Stein J
OF NEW SOUTH WALES  25 February 1994

OSHLACK
v
RICHMOND RIVER COUNCIL
and
IRON GATES DEVELOPMENTS PTY LTD

JUDGMENT ON COSTS

On 22 December 1993 I dismissed a challenge by the applicant to the validity of a development consent granted by the first respondent (Richmond River Council) to the second respondent (Iron Gates Developments Pty Ltd).  The consent concerned a 110 lot residential subdivision of land at Evans Head commonly known as "Iron Gates".  Both the Council and the developer now seek orders that the applicant, Mr Al Oshlack, pay their costs of the application.  They submit that costs should follow the event of the litigation determined in their favour.  The applicant argues that each party should bear his and its own costs, submitting that there are special circumstances why the "normal rule" of costs being awarded to the successful party should not be followed.  His attorney, Mr Ian Dodd, argues that part of the basis for costs not being awarded against his client flow from the public interest nature of the litigation.
 The notion of public interest litigation has been gaining ground in Australia over the last decade.  The concept derives from principles of public law rather than private.  The development springs from the increasing access of individual members of the public and groups to approach the courts to seek to enforce aspects of Public Law.  This is particularly so in the area of environmental law where many New South Wales statutes include open standing provisions enabling "any person" to seek to enforce breaches of the law (viz., Environmental Planning and Assessment Act 1979 (s123), Heritage Act 1977 (s153), National Parks and Wildlife Act 1974 (s176A), Wilderness Act 1987 (s27), Uranium Mining and Nuclear Facilities (Prohibitions) Act 1986 (s10), Environmentally Hazardous Chemicals Act 1985 (s57) and more recently, the Local Government Act 1993 (s674).

The issue of the costs of such legal challenges may, of course, bear upon the ability of individuals and organisations to utilise these provisions.   In an address to an International Conference on Environmental Law in 1989, Toohey J recognised this stating:-

"Relaxing the traditional requirements for standing may be of little significance unless other procedural reforms are made.  Particularly is this so in the area of funding of environmental litigation and the awarding of costs.  There is little point in opening the doors to the courts if litigants cannot afford to come in.  The general rule in litigation that 'costs follow the event' is in point.  The fear, if unsuccessful, of having to pay the costs of the other side (often a government instrumentality or wealthy private corporation), with devastating consequences to the individual or environmental group bringing the action, must inhibit the taking of cases to court.  In any event, it will be a factor that looms large in any consideration to initiate litigation."

There has also been recent overseas consideration of the influence of costs on the ability of citizens to enforce breaches of environmental law.  For example, during 1993, a Draft European Community Directive was developed concerning Access to Justice in Environmental Matters.  Article 8(1) on costs provides:-

"Member States shall take the necessary steps to ensure that the cost of administrative and judicial proceedings under Articles 3 to 7, including lawyers' and experts' fees and possible security deposits, shall not cause a barrier to the commencement or continuation of such proceedings.  In particular they shall ensure that the plaintiff in case of success obtains recovery of all costs reasonably incurred, either from the defendant or from state funds.  If the action is unsuccessful but has been brought on the basis of an arguable case and in good faith, the plaintiff shall not be required to pay court fees or the costs of other parties, and these costs shall be borne by state funds.  Exceptions may be made for unnecessary expenses caused by the conduct of the plaintiff."

The United Kingdom Law Commission also examined the issue of costs in public interest litigation in its Report Administrative Law: Judicial Review and Statutory Appeals (1993). At para 11.9 the Report stated:-

"Reference has been made above to the general rule that costs follow the event.  The counter argument to awards of costs, particularly liability to pay the other side's costs, in proceedings brought in the public interest has been put to us.  It is suggested that where an application brought in good faith in the public interest is unsuccessful, the applicant should not be obliged to pay the other side's costs (though they might be left to pay their own costs)."

The Commission's provisional view (11.14) was that where leave was granted by a Judge to commence proceedings on the basis that the application discloses arguable grounds for the exercise of jurisdiction, "[We] consider that it may be appropriate to disapply the usual costs rules, on the footing that they are inappropriate to the nature of the jurisdiction".

Of course, it should not be forgotten that the issue of costs in public interest litigation has two sides.  As well as the issue posed in this case is the other side of the coin, namely, what costs order ought be made when a party bringing litigation in the public interest is successful?  There seems little doubt, unless disqualified by conduct or by other valid discretionary reason, that a costs order would normally be made in favour of the applicant.  Most discussion has centred around whether or not a public interest litigant should, when appropriate, obtain costs on a full indemnity basis rather than a party/party order, see eg.,  Re Smith; Ex parte Rundle (No 2) (1992) 6 WAR 299 at 303.

The principal decision on this aspect of costs in public interest litigation is AFCO v Tobacco Institute of Australia Ltd (1991) 100 ALR 568. In ordering the respondent to pay the applicant's costs on an indemnity basis Morling J stated that

"In a real sense, the costs were incurred in the public interest.  It is very much in the public interest that the respondent be restrained.... I do not think it would be in the public interest for a litigant in the position of the applicant to be heavily out-of-pocket in consequence of the public-spirited action it has taken" (at 571-572).

The first reference within Australia I can find to the issue of costs in public interest litigation is Kent v Cavanagh (1973) 1 ACTR 43. In dismissing the plaintiffs' claim that the erection of a communications tower on Black Mountain was in breach of the law, Fox J, sitting in the Supreme Court of the A.C.T., said:-

"It seems to me undesirable that responsible citizens with a reasonable grievance who wish to challenge Government action should only be able to do so at risk of paying costs to the Government if they fail.  They find themselves opposed to parties who are not personally at risk as to costs and have available to them almost unlimited public funds.  The inhibiting effect of the risk of paying costs is excessive and not in the public interest" (at 55).

He made no order as to costs.

Cases in the Land and Environment Court

It is instructive to review the evolution of this Court's response to the issue of costs in public interest litigation.  The first reported case to address the question was Prineas v The Forestry Commission (1983) 49 LGRA 402. Cripps J said that a successful party in judicial review proceedings in the Land and Environment Court ought to obtain costs "in the absence of special circumstances" (at 419). He added that the fact that proceedings were brought under s123 of the Environmental Planning and Assessment Act was not of itself a special circumstance.  The unsuccessful applicant was ordered to pay one-half of the costs of the Forestry Commission but none of the costs of the logging contractors.

Some years later in Campbell v The Minister (Unreported 24 June 1988) Cripps J, the former Chief Judge of the Court, stated:-

"I accept that in an appropriate case the ordinary rule as to costs might not apply by reason of the fact that one of the parties can legitimately claim to represent the public interest."

Hemmings J followed Campbell in Fuller v Bellingen Shire Council (Unreported 13 July 1988).  He concluded:-

"I am satisfied in this case that the applicant properly brought to this Court public interest litigation to resolve a dispute which was made more complex by unusual procedures which had been adopted by Council in its determination of the application, and resolutions which were ambiguous and uncertain.  Whilst ultimately the Court was satisfied that the obligations imposed by the provisions of the Environmental Planning and Assessment Act 1979 for environmental assessment had been observed, Council is now better informed as to its powers and duties, and will no doubt take steps to ensure that similar problems and uncertainties are avoided in future.

In my judgment this is not a case in which costs should automatically follow the event."

Shortly thereafter Cripps J made no order for costs in favour of the successful party in Nettheim v The Minister (No 2) (Unreported 28 September 1988).  He said:-

"The outcome of the present litigation is of significance to the City of Sydney.  As I have said, it was made contrary to a recommendation by a Commissioner of Inquiry.  Mr Nettheim had a reasonable, albeit unsuccessful, argument.  Accordingly, I take into account the circumstances surrounding the making of the second order, the quality of the argument of the challenger and the evident public interest in the fate of the facade and foyer of the Regent Theatre.  It would seem to me that if there is to be a case where the Court would depart from its usual practice because the litigation was "public interest" litigation, this is such a case. Accordingly, I am of the opinion that there should be no order as to costs."

Nettheim was referred to by Bignold J in Rundle v Tweed Shire Council (No 2) (1989) 69 LGRA 21. His Honour was of the opinion that special circumstances do not exist simply by virtue of the categorisation of proceedings as public interest litigation (at 26), emphasising that there needs to be something more to constitute special circumstances. In his discussion Bignold J made reference to the traditional formulation of the "usual costs" rule not distinguishing between private law litigation and public law litigation (at 24). I will return to this later.

The next flurry of cases in the Court on costs in public interest litigation was in 1992.  In Liverpool City Council v RTA (1992) 75 LGRA 210, Cripps J accepted Bignold J's conclusion in Rundle.  The fact of public interest litigation was not in itself sufficient to depart from the usual rule.  In Darlinghurst Residents v Elarosa Investments Pty Ltd (No 3) (1992) 75 LGRA 214 I made no order for costs following an unsuccessful challenge to a development consent. I found that the proceedings could properly be characterised as public interest litigation. I took account of the notoriety of the application, the public controversy, the considerable environmental impact of the 43 storey tower block and the significant number of diverse objectors. I also noted that the challenge was arguable and raised significant and serious issues which contributed to the wider understanding of aspects of environmental law. In summary I concluded that the circumstances of the litigation established sufficient special reason to depart from the ordinary rule.

A similar conclusion was reached in Cooper and Wilton v Maitland City Council (Unreported 17 June 1992) although the special circumstances included conduct by the Council which contributed to the litigation.  I concluded:-

"There was undoubtedly a wide public interest in the fate of the application, not confined to the present applicants.  Indeed, there were large numbers of concerned residents and landowners.

Additionally, as I have already alluded, the challenge had legs.  The issues raised were serious and with ramifications wider than merely the proceedings themselves.

Taking into account all of the circumstances surrounding the litigation - the conduct of the Council and its aldermen, the characterisation of the proceedings (as public interest litigation) and the nature of the challenge itself, I am satisfied that special circumstances exist to justify the departure from the ordinary rule."

To complete the Land and Environment Court survey I should add a reference to the Citizens Airport Environment Association (CAEA) v Maritime Services Board (Unreported 9 June 1993). This was part of the Sydney Airport third runway litigation. I had dismissed a challenge by a citizens group [(1992) 78 LGERA 57] whose appeal was subsequently dismissed in the Court of Appeal [(1993) 30 NSWLR 207]. While I found that the litigation had undoubted public interest content, this did not establish exceptional circumstances sufficient to justify a departure from the ordinary rule since the litigation had no real prospect of success.

While applications for security for costs attract somewhat different principles, it is relevant to note that both the Land and Environment Court and the New South Wales Court of Appeal have been reticent to order security for costs in public interest litigation, especially in the area of environmental law.  A number of cases have been collected by Josephine Kelly in an article Security for Costs and Public Interest Litigation (Environmental Law News, Autumn 1993 No 34 at 13).  These include Kirby P in CAEA v Maritime Services Board (Unreported, Court of Appeal,  23 December 1992) and Priestly JA in Brown v EPA (Unreported, Court of Appeal, 1 April 1993).  In many respects their reasoning in refusing to order security for costs parallels the reasons used to justify departure from the ordinary rule as to costs.

Cases in other jurisdictions

In Carter v Northmore Hale Davy & Leake (Unreported, Full Court of Western Australia, 21 September 1993) the Court discussed the concept of departure from the ordinary rule of costs in actions characterised as "public interest litigation".  Although their Honours found that the case before them was "a very different case from those which have been described as `public interest litigation'", they appeared to accept the concept.
 In Arnold v Queensland [(1987) 73 ALR 607] the full Federal Court declined to order the unsuccessful appellant to pay the costs. The reason given by Wilcox J (at 622) and Burchett J (at 635) make it clear that both regarded the fact that the proceedings were brought by a public interest group as a relevant consideration.

Burchett J was again to consider the liability of public interest bodies to pay costs in ACF v Forestry Commission (1988) 81 ALR 166. His Honour distinguished Kent v Cavanagh saying:-

"If a body is set up to pursue causes, which its founders consider to be in the public interest, and which generally may be in the public interest, by means including court proceedings against others, it does not follow that those proceeded against should be deprived of the ordinary protection of a right to an order in respect of their costs in the event the claims made against them prove unfounded" (at 170-171).

More recently Gummow J accepted Burchett J's statement in the ACF case  in Botany Municipal Council v Secretary DASETT (1992) 76 LGRA 213. His Honour distinguished Kent v Cavanagh, Arnold and Nettheim, the lastmentioned on the basis that the New South Wales legislation on standing "stands in contrast to s5 of the Administrative Decisions (Judicial Review) Act" (at 218).  He ordered the applicants to pay the respondents' costs.  However, on any reading of the circumstances of the litigation it is virtually impossible to see how the Botany Council could have avoided a costs order, whether brought in the public interest or not.  Two to three weeks had been set aside for the hearing and a few days before the commencement the Court granted the Council leave to discontinue.  Is it any wonder that costs followed the event!

Public law considerations

It is unsurprising that the development of public law providing avenues of accountability and notions of administrative fairness would spawn the concept of public interest litigation. An important impetus to the development of public participation in the enforcement of environmental law has been the statutory reform in New South Wales of the common law of standing. Section 123 in particular has been viewed as of major importance in identifying the role of the Land and Environment Court. In Hannan v Elcom (No 3) (1985) 66 LGRA 306, Street CJ described the role in the following words:-

"It is the duty of that Court, in formulating `such orders as it thinks fit', to have regard at all times to the pursuit of the objects of the Environmental Planning and Assessment Act as set out in s5. This involves, in appropriate cases, the evaluation of matters extending beyond the mere determination of the rights and matters in dispute between the immediate parties. It involves due weight being given to the public interest and the interests of other affected persons in the overall context of the pursuit of the objects broadly set out in s5. It is at this point that I revert to s123 of the Environmental Planning and Assessment Act..... This provision read in the context of the objects of the Act as set down in s5 makes it apparent that the task of the Court is to administer social justice in the enforcement of the legislative scheme of the Act. It is a task that travels far beyond administering justice inter partes. Section 123 totally removes the conventional requirement that relief is normally only granted at the wish of a person having a sufficient interest in the matters sought to be litigated. It is open to any person to bring proceedings to remedy or restrain a breach of the Act.  There could hardly be a clearer indication of the width of the adjudicative responsibilities of the Court.  The precise manner in which the Court will frame its orders in the context of particular disputes is ultimately the discretionary province of the Court to determine in the light of all of the factors falling within the purview of the dispute" (at 313).

Deane J made similar pertinent comments regarding s80 of the Trade Practices Act 1974 (Cth) in Phelps v Western Mining (1978) 20 ALR 183 at 189-190.

For justice to be administered through open standing provisions it was and remains necessary for the courts to review any unreasonable procedural barriers to public participation.  One such example is the traditional requirement for an applicant to give an undertaking as to damages upon an application for an interlocutory injunction.  The requirement had its origin in private litigation in order to do justice and strike a balance between the competing private interests (F. Hoffman La Roche v Secretary for State for Trade [1975] AC 295 at 360). However, applicants in public interest litigation have no private interest in the proceedings. Their prime motivation is to seek to uphold the public interest and the rule of law. In Ross v State Rail Authority (1987) 70 LGRA 91 at 99-100, Cripps J held that, in recognition of the public interest nature of the litigation, the offering of an undertaking for damages was but one factor to be considered in the balance of convenience. Ross has been repeatedly followed in the Court in public interest cases.

Similar considerations apply in relation to the traditional rule of costs following the event of the litigation notwithstanding that the general discretion as to costs is "absolute and unfettered"  (Donald Campbell v Pollak [1927] AC 732 at 811; see also s69(2) of the Land and Environment Court Act, 1979).  As observed in Rundle v Tweed (No 2) the so-called ordinary rule of costs following the event of the litigation grew up in an era of private litigation.  In  Cooper & Wilton I drew attention to the need to distinguish between the nature of private commercial litigation and applications to enforce public law obligations arising under environmental laws.  As Toohey J (referred to earlier) observed, procedural reform to the awarding of costs following the event is necessary if individuals or groups are not to be inhibited from resorting to the courts.  Unless this occurs, relaxation of standing may have little significance.
 It is with this backdrop that the Land and Environment Court has cautiously approached the discretion as to costs and the question of special circumstances warranting a departure from the "usual rule".  The authorities mentioned  have acknowledged the concept of public interest litigation and that the categorisation of proceedings as such may be a factor which contributes to a finding of special circumstances.  However, cognisant of the competing rights of successful respondents being deprived of costs, the Court has confirmed that the categorisation of proceedings as public interest litigation of itself is not enough to constitute special circumstances, rather something more is required.

I have discussed aspects of the evolution of public interest litigation and costs orders at some length because I think that there exists a degree of misapprehension and misunderstanding in this area.

The instant application

I turn therefore to the present case.  The applicant, Mr Al Oshlack, is a dedicated environmentalist active on the north coast.  He is a member of an organisation known as the Lismore Greens, originally the applicant in the proceedings.  Mr Oshlack was also associated with earlier litigation concerning the Iron Gates site, although not as a party.

On the applicant's behalf Mr Dodd makes a number of points of submission.  He says that his client has no pecuniary interest in the outcome of the litigation, only a concern (as a member of the public) for the public interest in the enforcement of environmental law.  In particular, Mr Oshlack has a concern for endangered species of fauna.  Mr Dodd says that the subject matter of the proceedings, the development of the sensitive Iron Gates site, is a matter of general public interest travelling well beyond the particular case. For example, he cites the continuing interest of the National Parks and Wildlife Service and its opinion that the Council should have required the developer to submit a Fauna Impact Statement (FIS). 

The endangered fauna with which the case was concerned is the koala - a species whose preservation is of wide public concern.  Mr Dodd also argues that the basis of his client's legal challenge was arguable and raised significant issues of environmental law regarding the fauna protection provisions of the Environmental Planning and Assessment Act and the Endangered Fauna (Interim Protection) Act 1991 which will assist in future understanding of the application of the law. He maintains that the litigation is truly public interest litigation and the additional features he refers to constitute special circumstances justifying a departure from the ordinary rule.

Both respondents ask for costs and submit that there are no circumstances whereby the general rule of costs following the event should be set aside.  The respondents also submit that the applicant's case was weak and he persisted in almost all aspects of his challenge even when it was apparent that some were unarguable.  Ms Winters, on behalf of the Council, stresses the participation opportunities made available to the public by the Council, including to the applicant.  She also submits that Mr Oshlack's lack of pecuniary interest in the proceedings is irrelevant.  She expressed concern that if applicants were able to bring test cases without penalty as to costs if unsuccessful,  the floodgates would be opened.  Leaving aside Deane J's refutation of the argument in Phelps at 189-190, also Ogle v Strickland (1987) 71 ALR 41 at 50 (Lockhart J) and 57 (Wilcox J), the fact is that 14 years experience of open standing provisions in the Land and Environment Court has produced little more than a modest flow barely wetting the wellies. On behalf of the developer, Mr Brabazon supports the arguments of Ms Winters. He also notes that Mr Oshlack brought the proceedings as an individual and not as part of or on behalf of a group.

The first question is whether the subject matter of the proceedings is one of public interest. An examination of the litigation discussed in my reasons for judgment of 22 December 1993 leads to an affirmative answer to this question. The proceedings were a legal challenge to the validity of a development consent granted by the Council over Portions 276 and 277 of the Iron Gates site. The land is partly covered by littoral rainforest and SEPP 14 designated wetland. It is habitat for the koala, listed as an endangered species in Schedule 12 of the National Parks and Wildlife Act. The applicant's challenge was based on the alleged failure of the Council to have regard to the factors listed in s4A of the Environmental Planning and Assessment Act and its failure to require a fauna impact statement under s77(3)(d1) of the Act. The case also claimed that the consent was void because the Council failed to give proper consideration to the endangered fauna factors required by s90 of the Act and the Regulation. Further, the Council's conclusion that there was unlikely to be a significant effect on the environment of endangered fauna was one not reasonably open to the Council. There were subsidiary arguments but the above is a summary of the principal thrust of the applicant's case.

An examination of the judgment reveals that a significant issue in the case involved the question of the construction and meaning of the consent itself and its legal certainty. These issues arose directly from the applicant's Amended Points of Claim (paras. 19A-19D).  The submissions made by Mr Brockwell, on behalf of the applicant, on the issues of the construction of the consent and its certainty were respectable and in no way unarguable.  Similarly, the submissions made on the other major aspects of the challenge were eminently arguable although unsuccessful.  The case was also one of the first Class 4 challenges to examine the endangered fauna provisions inserted into the Environmental Planning and Assessment Act by the Endangered Fauna (Interim Protection) Act. The analysis of the application of these provisions will be helpful to the future administration of the provisions and enforcement. In addition, I held that the body of law developed under Part 5 of the Environmental Planning and Assessment Act relating to the interpretation of "likely" and "significantly" in s112 could be imported into the endangered fauna provisions in Part 4 of the Act (Judgment at 20).  This issue had not been decided before and was in accordance with the applicant's submissions although the second respondent took a different approach.

There is no doubt that the subject matter of the litigation, the development of the Iron Gates site, has been an issue of controversy on the North Coast for some years.  It has resulted in a spate of litigation and aroused some deep feelings on all sides.  There is undoubtedly a public interest in the outcome of the litigation, in the development to take place on the site, the preservation of the natural features and flora of the site and the impact on endangered fauna, especially the koala.  The public interest is not confined to the applicant and like minded citizens but includes the continuing concern of the public authority entrusted with the protection of natural values, the National Parks and Wildlife Service.  For these reasons I have no doubt that the proceedings can properly be categorised as public interest litigation.

I reject Ms Winters' submission that the fact that the applicant has no pecuniary interest in the outcome is irrelevant.  Indeed, if he had such an interest it might be argued that it took the litigation outside the public interest perspective.  Mr Oshlack's pursuit of the litigation was motivated by his desire to uphold the public interest in ensuring obedience to environmental law which he claimed was breached.  It was also motivated, no doubt, by a desire to preserve the habitat of the endangered koala on and around the site.  There is little doubt that his stance is shared by a significant number of members of the public although they did not join in the legal challenge.

In summary I find the litigation to be properly characterised as public interest litigation. The basis of the challenge was arguable, raising serious and significant issues resulting in important interpretation of new provisions relating to the protection of endangered fauna. The application concerned a publicly notorious site amidst continuing controversy.  Mr Oshlack had nothing to gain from the litigation other than the worthy motive of seeking to uphold environmental law and the preservation of endangered fauna.  Important issues relevant to the ambit and future administration of the subject development consent were determined, including the developer's acceptance of the need for an FIS for stage 2.     These issues have implications for the Council, the developer and the public.

In my opinion there are sufficient special circumstances to justify a departure from the ordinary rule as to costs.  As a result there will be no order as to costs.

I HEREBY CERTIFY THAT THIS AND THE PRECEDING 16 PAGES ARE A TRUE AND ACCURATE COPY OF THE REASONS FOR JUDGMENT HEREIN OF THE HONOURABLE JUSTICE PAUL L STEIN.

Associate